Large provider new financial reporting obligations reminder dispatched by DoE

As part of the Federal Government’s recently passed Cheaper Child Care Bill, approved providers deemed to be “large” are required to proactively provide financial and other information to the Department of Education for review. 

 

The move is part of a broader effort by the Government to improve transparency and integrity across the early childhood education and care (ECEC) sector ahead of a much anticipated broadening in Child Care Subsidy amounts and accessibility criteria due to take place on 1 July 2023. 

 

The following is summary of key aspects of the new rules:

 

The new rule

 

Large providers must report financial information, including information about revenue, profits, and leasing arrangements.

 

Definition of a large provider

 

A large provider is one that:

 

• operates 25 or more services
• shares operation of 25 or more services with another provider
• plans to operate or share operations of 25 or more services

 

If an organisation operates less than 25 services, these financial reporting obligations will not apply.

 

Information that could be requested 

 

The information required will depend on the individual circumstances of the provider and may include:

 

• a balance sheet
• a profit and loss statement
• a statement of changes in equity
• a cash flow statement
• details of leasing arrangements and costs
• a Director’s report if available
• if audited for the reporting period, the Auditor’s report
• information such as if a provider has a credit facility or any debt guarantees in place from a separate entity

 

The Department will contact large providers directly via email to let them know what to report. 

 

The reasons for the information being requested

 

The Department of Education are asking for the enhanced reporting in order to:

 

• assess the financial viability of large providers
• improve the transparency of child care costs
• protect the government’s investment in the sector

 

The Department has stated that monitoring the financial health of large providers will help them identify and mitigate risks posed by the sudden exit of large providers from the market. 

 

In addition, they have indicated that they may seek to publish some information, such as profits, revenue and rental costs, on StartingBlocks.gov.au to improve the transparency of child care costs by increasing the amount of information available to families when choosing a service.

 

What are the consequences of non-compliance?

 

The Department may take compliance action if a provider fails to meet their obligations including: 

 

• putting conditions on provider approvals  
• issuing an infringement notice 
• suspending or canceling provider approvals 

 

When will the new rules apply?

 

The financial reporting obligations will start from 1 July 2023.

 

To learn more about the new financial reporting obligations for large providers visit the Department of Education’s website here.